Here at Stefans Law Group, we like to keep our clients informed of the legislative changes that will affect their families. As of April 1, 2014 the New York Estate Tax exemption was raised from $1million to $2,062,500. This is great news! However, lack of planning could have your family paying hundreds of thousands in estate tax.

On April 1, 2014, Forbes.com released an article “The New New York Estate Tax Beware A 164% Marginal Rate” reflecting the New York State’s new changes and advising individuals to watch out for big traps in the new law. Here is some of the important information from that article:

Exemption Schedule:

DATE OF DEATH

EXEMPTION AMOUNT

April 1, 2014 to April 1, 2015

$2,062,500.00

April 1, 2015 to April 1, 2016

$3,125,000.00

April 1, 2016 to April 1, 2017

$4,157,500.00

April 1, 2017 to April 1, 2019

$5,250,000.00

The “Cliff”:

As of April 1st of this year, if you or your family member dies with just five percent (5%) more than the exemption amount, you face a “cliff”. This cliff, as the article explains is that you are going to be taxed on the full value of your estate, not just the amount over the exemption. Prior to April 1, 2014, New York would only have placed an estate tax on the estate’s value exceeding the one million dollar exemption. Now, if the estate exceeds the exemption by 5%, the entire estate is taxable to New York, with no exemption at all!

Look-back and Portability:

In addition to the changes indicated above, the article references a new three-year look-back for taxable gifts. This is very important for individuals to know! As of April 1, 2014 any gifts made within that three year time period will be added back into the taxable estate. The federal portability provision allows the surviving spouse to add the unused portion of his/her deceased spouse’s exemption to his/her own. This election is made on the first-to-die’s estate. New York did not add this to its legislation. Therefore, the State not exactly matching up to the federal law.

Like many things in life, if you start planning now for your future you can avoid those traps in the New York State laws. At Stefans Law Group PC, we provide services in Elder Law and Medicaid Planning, Estates and Trusts, Probate, Guardianship, and Tax Planning. We welcome the opportunity to sit with you and discuss your long-term planning needs. Contact us today at (516) 692-2744 to schedule an appointment to create a proper asset protection plan for you. You can also read further as to how to better protect your family from facing the “cliff” and other financial issues at Stefanslawgroup.com